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Malaysia's economic growth slows to 4.2 pct in first quarter

Xinhua, May 13, 2016 Adjust font size:

Malaysia's economic growth slowed to 4.2 percent in the first quarter of 2016, mainly reflected external shocks to the economy and cautious spending by the private sector, its central bank said Friday.

The growth rate continued to moderate from 5.7 percent in the first quarter last year and 4.5 percent in the previous quarter.

Private sector activity remained the key driver of growth, although the pace of expansion moderated amid on-going adjustments in the economy, the central bank said, adding that on the supply side, the major economic sectors registered a moderate growth performance.

On Malaysia's trade performance, gross exports increased by 1.0 percent in the first quarter, which was supported mainly by the continued expansion in manufactured exports despite a larger contraction in commodity exports. Meanwhile, gross imports contracted marginally by 0.4 percent, reflecting mainly the lower imports of capital and intermediate goods.

The central bank said the Malaysian economy is expected to remain on a sustained growth path of 4 percent to 4.5 percent, despite the challenging economic environment globally and domestically.

Central Bank governor Muhammad Ibrahim told a press conference that the growth was expected to rebound in the second half of the year, supported by manufacturing sectors rising from added capacity, improvement of commodities production from diminishing effect of El Nino, the higher wages for civil servants and the upward revision of minimum wages that should improve consumption.

The central bank said Malaysia's domestic demand will continue to be the principal driver of growth, sustained primarily by private sector spending. However, domestic consumption is expected to grow at a moderate pace as households continue to adjust to the higher cost of living.

Overall investment is also expected to grow at a slower pace but will remain supported by the implementation of infrastructure development projects and capital spending in the manufacturing and services sectors. Uncertainties in the external environment and the on-going adjustments in the domestic economy pose downside risks to growth, it said. Endite